Minister Dr. Hoffmeister-Kraut: “Industry partners and private investors remain cautious, which could ultimately spell the end for many entrepreneurs. Our program helps them bridge the gap until the next round of financing.”
The “Start-up BW Pro-Tect” relief package for crisis-stricken startups will be extended through the end of September and increased from 30 million to 36 million euros. The State Cabinet made this decision today (June 22). “Start-ups continue to face a very difficult situation due to the COVID-19 pandemic. Industry partners and private investors have so far been reluctant to enter into new start-up partnerships or make investments, which could ultimately spell the end for many founders. This by no means affects only startups in the restaurant, tourism, or other sectors directly and severely impacted by the pandemic,” explained Minister of Economic Affairs Dr. Nicole Hoffmeister-Kraut. “Our program, which is unique in Germany, helps these young companies bridge the gap until the next round of financing. In this exceptional situation, the startups also have expert local contacts they can turn to for assistance.”
“Start-ups play a key role in accelerating necessary transformation processes in the areas of digitalization, mobility, and climate protection. Ending program funding would hinder these important processes. Especially in the wake of the pandemic, Baden-Württemberg is more dependent than ever on such emerging companies,” the minister added. In Baden-Württemberg, startup activity is more heavily concentrated on B2B, that is, business customers. “During the pandemic, many startups were unable to acquire new business customers, showcase their offerings at trade shows, or implement pilot projects that had already been planned—for example, in the areas of smart manufacturing, industry, or among small and medium-sized enterprises.”
Since June 2020, the Baden-Württemberg Ministry of Economic Affairs has been supporting startups during the COVID-19 crisis through the “Start-up BW Pro-Tect” funding program. Pro-Tect is an expansion of the “Start-up BW Pre-Seed” early-stage funding program—the only one of its kind in Germany—to include crisis-stricken startups that have already successfully completed their first round of financing and achieved initial market success. Since Pro-Tect became operational at the end of June 2020, more than 140 startups have received support to date. This corresponds to a total of approximately 25 million euros in state funding, as well as additional funds from private co-investors amounting to approximately 5 million euros.
More Information
“Start-up BW Pro-Tect” is provided as a convertible loan and can cover initial capital needs of up to 200,000 euros, 80 percent of which is financed by the state and 20 percent of which must come from private co-investors. In justified exceptional cases, the grant may also amount to up to 400,000 euros.
The eligibility requirements for funding are:
- The additional liquidity needs must have arisen as a result of the negative effects of the coronavirus.
- The startup must have been founded no more than five years ago, and no profits have yet been distributed (in accordance with Article 22 of the AGVO).
- As a general rule, no more than two million euros in equity capital may have been raised.
- It must be a growth-oriented business model that is fundamentally driven by innovative product developments or applications (such as AI applications, platform technologies, e-commerce, smart green technologies, Industry 4.0, or life sciences).
- The recommendation and support must be provided by a Start-up BW Accelerator and a program partner of “Start-up BW Pre-Seed.”
- Private co-investors must continue to contribute at least 20 percent of the respective startup financing on the same terms as the state.
- The basis for calculating the financing amount is the “cash burn”—that is, ongoing cash-outflow costs minus any revenue for the next six months.
The program is a key component of the Ministry of Economic Affairs’ state-wide “Start-up BW” campaign and is administered by L-Bank, the development bank of the state of Baden-Württemberg.
For more information, visit www.startupbw.de.
